Peace River Agreement

On March 19, 2015, the Province began a 'renegotiation' of the Fair Share agreement which was not scheduled to expire until 2020. A new agreement called the Peace River Agreement was signed by all nine regional members on May 29, 2015.

What is Peace River Agreement?

  • The purpose of the agreement was is to bridge the gap between the economic benefits of having access to the industrial tax base and the legal authority to access that industrial tax base when it is located outside of municipal boundaries. Simply put: municipalities provide infrastructure in the form of policing, water, sewer, roads and hospitals to industries outside city borders without the benefit of being able to tax them.
  • The local governments who shared in Fair Share were: Fort St. John, Dawson Creek, Chetwynd, Hudson Hope, Pouce Coupe, Tumbler Ridge, Taylor and the Peace River Regional District.
  • The Peace River Regional District is different from municipalities in that it can only levy a tax for the purpose of funding for a specific function (like water or sewer services). The PRRD has access to the industrial tax base which is the richest in B.C. 
  • The oil and gas sector experienced tremendous growth (40 per cent) from 2001 to 2006, and is in 2015 represented 30 per cent of the regional economy.
  • The indexing formula used in determining the amount of the grant aligns the amount paid to the region in Fair Share funding with Industrial property assessments. When assessments in the region go up so did the allocation of Fair Share funds. 

Background

  • In the early 1990s, the region started a campaign, including commissioning a series of reports to gather information on the oil and gas sector and the impacts on the area, to tackle the fiscal imbalance and negotiate a greater share of provincial revenue. The conclusion of the studies was that there was a disconnect between industry and the communities that provide services to industry.
  • In 1993, the Province recognized the fiscal imbalance facing the region and began negotiations for what would become the Fair Share Agreement.
  • The first version of the Fair Share Agreement was in place in 1994 and provided $4 million to the region ($2 million from a tax on industry and a $2-million Provincial grant).
  • In signing the 1994 MOU, the local governments also served notice that it was a good first step but insufficient to meet their long-term needs.
  • In 1997 the region pressed for a revised agreement. After much pressure, the Province finally responded with a $12-million agreement in 1998.
  • Given considerable increases in the region’s oil and gas activity, discussions opened with the Province in 2002/03 to establish a formal process to examine the oil and gas industrial property tax issue in northeastern BC, with the agreed objective to identify a permanent solution to the oil and gas property tax base issue in North Eastern BC.
  • Negotiations took place in 2004 and on February 1, 2005, the Province offered the Peace Region municipalities what is now known as the Fair Share Agreement 3, effective from 2005 to 2020.